Banks' excess liquidity to form special fund for Sidr victims
Monday, 10 December 2007
Siddique Islam
The Bangladesh Bank (BB) is likely to launch a special fund with the support of the excess liquidity of the commercial banks to strengthen financing activities in the Sidr-affected areas of the country's southern districts.
Excess liquidity of the scheduled banks stood lower at Tk 131.29 billion at the end of August last against Tk 142.79 billion as of end June, 2007, according to the BB's statistics.
The new fund will be channelled through non-governmental organisations (NGOs) in the cyclone-hit areas.
The central bank is also going to establish a link between the commercial banks and the NGOs to intensify disbursement of fresh loans to the cyclone-hit people.
"We have convened a series of meetings with commercial banks and NGOs to devise appropriate mechanism for providing loans to the cyclone-hit people," a BB senior official told the FE Sunday.
He also said the central bank will ask some NGOs to gear up their financing activities offering credit at low rates of interest, particularly in the cyclone-affected districts, to help implement the ongoing rehabilitation programmes.
BB Governor Salehuddin Ahmed, who is also Chairman of Micro-credit Regulatory Authority, will sit with some leading NGOs tomorrow (Tuesday) to discuss the overall financing operations in the country's Sidr-affected areas.
Sources, however, said the central bank sent a list of 62 NGOs to the commercial banks in this connection.
The commercial banks, particularly the private commercial banks having not enough branches in the rural areas, will use such NGO link to strengthen disbursements of their agricultural loans and SME (small and medium enterprises) financing, the sources added.
"We may allow such mechanism for providing loans in the cyclone and flood affected areas to rehabilitate the people," another BB official said, adding that the central bank is still planning to form the special fund that will be disbursed through NGOs.
The central bank is scheduled to meet with the government-owned commercial banks on December 17 and the private commercial banks (PCBs) the following day to find out an appropriate strategy for strengthening disbursement of fresh loans in the cyclone-hit areas.
The BB may advise the banks having surplus liquidity to expedite lending to agriculture, SMEs, housing sector and other productive areas.
On December 19, the central bank chief is scheduled to hold a press briefing to disclose the outcome of his series of meetings with the commercial banks.
The BB has already directed the banks for taking initiatives to achieve a minimum of 70 per cent to 80 per cent of their farm credit disbursement target by January next in the cyclone-hit areas.
The central bank has set the credit target at Tk 17.0 billion for government-owned banks and financial institutions for disbursement among the cyclone-hit people.
The BB has set the overall credit target at Tk 81.92 billion, which includes Tk 13.47 billion from PCBs and the rest from government-owned banks and financial institutions for disbursement among farmers across the country.
The BB earlier asked eight government-owned banks and financial institutions to intensify disbursement of fresh farm loans, along with rural credits, to all sections of the cyclone-affected people on easy terms and conditions.
Under the new move, the cyclone-hit farmers will be eligible for fresh credits after rescheduling their previous classified loans. The banks, if necessary, may relax the provision on down payment in case of loan rescheduling.
The Bangladesh Bank (BB) is likely to launch a special fund with the support of the excess liquidity of the commercial banks to strengthen financing activities in the Sidr-affected areas of the country's southern districts.
Excess liquidity of the scheduled banks stood lower at Tk 131.29 billion at the end of August last against Tk 142.79 billion as of end June, 2007, according to the BB's statistics.
The new fund will be channelled through non-governmental organisations (NGOs) in the cyclone-hit areas.
The central bank is also going to establish a link between the commercial banks and the NGOs to intensify disbursement of fresh loans to the cyclone-hit people.
"We have convened a series of meetings with commercial banks and NGOs to devise appropriate mechanism for providing loans to the cyclone-hit people," a BB senior official told the FE Sunday.
He also said the central bank will ask some NGOs to gear up their financing activities offering credit at low rates of interest, particularly in the cyclone-affected districts, to help implement the ongoing rehabilitation programmes.
BB Governor Salehuddin Ahmed, who is also Chairman of Micro-credit Regulatory Authority, will sit with some leading NGOs tomorrow (Tuesday) to discuss the overall financing operations in the country's Sidr-affected areas.
Sources, however, said the central bank sent a list of 62 NGOs to the commercial banks in this connection.
The commercial banks, particularly the private commercial banks having not enough branches in the rural areas, will use such NGO link to strengthen disbursements of their agricultural loans and SME (small and medium enterprises) financing, the sources added.
"We may allow such mechanism for providing loans in the cyclone and flood affected areas to rehabilitate the people," another BB official said, adding that the central bank is still planning to form the special fund that will be disbursed through NGOs.
The central bank is scheduled to meet with the government-owned commercial banks on December 17 and the private commercial banks (PCBs) the following day to find out an appropriate strategy for strengthening disbursement of fresh loans in the cyclone-hit areas.
The BB may advise the banks having surplus liquidity to expedite lending to agriculture, SMEs, housing sector and other productive areas.
On December 19, the central bank chief is scheduled to hold a press briefing to disclose the outcome of his series of meetings with the commercial banks.
The BB has already directed the banks for taking initiatives to achieve a minimum of 70 per cent to 80 per cent of their farm credit disbursement target by January next in the cyclone-hit areas.
The central bank has set the credit target at Tk 17.0 billion for government-owned banks and financial institutions for disbursement among the cyclone-hit people.
The BB has set the overall credit target at Tk 81.92 billion, which includes Tk 13.47 billion from PCBs and the rest from government-owned banks and financial institutions for disbursement among farmers across the country.
The BB earlier asked eight government-owned banks and financial institutions to intensify disbursement of fresh farm loans, along with rural credits, to all sections of the cyclone-affected people on easy terms and conditions.
Under the new move, the cyclone-hit farmers will be eligible for fresh credits after rescheduling their previous classified loans. The banks, if necessary, may relax the provision on down payment in case of loan rescheduling.